No matter where you call home, you’ve probably invested valuable time, money and effort in building the lifestyle that you have. But even with the smartest planning and execution, you can’t always predict when disaster is going to come knocking on your door. All it takes is a couple of minutes for a catastrophe like fire to burn everything to the ground. And what’s worse is the regret of not securing your home while you had a chance.
But I am only a renter in the UAE…
If this doubt has ever crossed your mind, here’s what you should know. It is only a legal requirement for the landlords to insure the building premises and this cover does not extend to the tenants contents. This is where the different types of home insurance coverage come into the picture.
Home Insurance policies are typically divided into three types of coverage:
- Buildings Insurance: This coverage extends to the building structure or premises and is suitable for home owners – both landlords and end-users.
- Home Contents: This coverage extends to all your contents such as furniture, appliances, household goods and suits the needs of both home owners as well as tenants.
- Personal Belongings: This coverage extends to all your valuables and personal belongings such as jewelry, laptops, mobile phones and other gadgets that can be carried outside the house.
[Related: Uncovering the truth behind home insurance]
Will home insurance cost a fortune?
You may be extra careful with that gas switch, but can you really be sure of your neighbor’s actions? Getting back on your feet after an unfortunate event such as a fire gutting your home can be exhausting both financially and mentally. But spending as little as AED 1 per day on a home insurance policy can save you a fortune!
The table below shows the estimated cost of insuring your contents, personal belongings and building:
Cost of insuring your home for Home Owners:
|Building’s value||Contents + Personal belongings||Cost of insurance * (Building + Contents & Personal belongings)||Cost of insurance (% of total value)|
|Villa||AED 3,500,000||AED 70,000 (50,000 + 20,000)||AED 2,150 (1,700 + 450)||0.06%|
|Apartment||AED 1,500,000||AED 70,000 (50,000 + 20,000)||AED 1,250 (800 + 450)||0.08%|
Cost of insuring your home for Tenants:
|Contents + Personal belongings||Cost of insurance *||Cost of insurance (% of total value)|
|Villa or Apartment||AED 70,000 (50,000 + 20,000)||AED 450||0.6%|
* Average insurance premiums based on quotes from multiple insurance companies
Let’s say you own a villa worth AED 3.5 million and contents + personal belongings worth AED 70,000. Based on quotes from multiple home insurance providers, the average cost of insuring both would be AED 2,150. Now compare this cost to the value of everything you own. This makes it clear that you are going to pay just 0.06% of the total value of your home, a very small price to secure your home against some pretty big risks!
The cost of home insurance is even lower for tenants since their primary concern is to cover their home contents and personal belongings, not the building premises. An annual premium of AED 450 will help you secure your home contents of up to AED 50,000 and personal belongings of up to AED 20,000.
When it comes to insurance, you never know if you’re going to need it, but if and when you do, it will save you hundreds to thousands of dirhams, only at a small price.